Factors Underlying the Internal Audit Quality for Effective Financial Governance in Federal Government Organizations in Abu Dhabi, UAE

This study seeks to address the variables that underlie internal auditing quality for effective financial governance in federal government organizations in Abu Dhabi, UAE. It will seek to establish the role of selected factors like the environment in which auditors work, the autonomy of internal auditors and the technical competence of auditors.

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FACTORS UNDERLYING THE INTERNAL AUDIT QUALITY FOR EFFECTIVE
FINANCIAL GOVERNANCE IN FEDERAL GOVERNMENT ORGANIZATIONS IN ABU
DHABI, UAE
Name:
University affiliation:
Professor:
Date:

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Overview of the Proposed Study
Internal audit and its significance in federal government organizations’ effective
financial governance cannot be overemphasized. Devoid of an effective internal audit, it
is impossible to effectively identify fund misuse cases in federal government
organizations. Additionally, an internal audit has been found useful to prevent the
misuse of funds. Internal audit’s importance underscores the need for a credible internal
audit system in federal government organizations (Goodson, Mory, & Lapointe 2012).
This study seeks to address the variables that underlie internal auditing quality for
effective financial governance in federal government organizations in Abu Dhabi, UAE.
It will seek to establish the role of selected factors like the environment in which auditors
work, the autonomy of internal auditors and the technical competence of auditors.
Study Rationale
Rojon and Saunders (2012) argue that one of the really important elements in a
research project is explaining the purpose that dictates conducting the study. This
purpose needs to be communicated in a compelling manner. It is needful to carry out
the study in Abu Dhabi. A discrepancy exists between the public expectation of the
quality of internal auditing in federal government organizations. As a consequence, it is
prudent to establish the factors that influence such quality and seek ways of addressing
it. This study will be beneficial to policymakers since they can use the recommendations
to polish policies or even come up with a policy. Through this study, it will be possible
for the federal government organizations to see areas of improvement so as to enhance
efficient internal auditing.

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Study Aim
The study that is at hand seeks to fulfil is to explore the factors playing a
significant role in the determination of internal auditing quality in federal government
organizations in Abu Dhabi.
Study Objectives
The study will be confined by three objectives:
1. To explore the influence of the working environment on the quality of internal audit in
federal government organizations in Abu Dhabi, UAE.
2. To explore the role of the autonomy of internal auditors on the quality of internal audit
in federal government organizations in Abu Dhabi, UAE.
3. To identify the effect of technical competence on the internal auditing quality in
federal government organizations in Abu Dhabi, UAE.
Research Questions
This study will seek answering these listed questions:
1. What influence does the working environment have on the quality of internal audit in
federal government organizations in Abu Dhabi, UAE?
2. What effect does autonomy of internal auditors have on the quality of internal audit in
federal government organizations in Abu Dhabi, UAE?
3. What effect does technical competence play on the quality of internal audit in federal
government organizations in Abu Dhabi, UAE?

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Literature Review
Internal auditors enhance controls and are useful in the promotion of
accountability and transparency. Internal auditors easily and without restraint access
information from any department in an organization. It is therefore needful for internal
audit to be conducted in a professional manner so as to ensure its success. Many
complaints of funds mismanagement have befallen Abu Dhabi federal government
organizations. Unfortunately, the government has been slack to detect and deter such
mismanagement of public resources. By the proper use of quality internal audit, the
government will be able to tame funds’ mismanagement in the public sector.
There are many challenges that are currently facing entities in the public sector. These
challenges range from harsh economic times to technological advancement related
challenges. Modern market trends as well as globalizations have also contributed to this.
Increasingly, internal audit is being considered as the only hope of survival for these
entities. An internal audit department that is functional is required so as to have an
internal controls system that is effective. Within the Abu Dhabi federal government
organizations, internal audits are independent auditing appraisal functions that are
established within the federal government organizations. Although the independence of
internal auditors has been greatly abused by ,any, it is an important aspect of internal
auditors. Internal interferences do not help in the thriving of a conducive environment for
internal auditing. The spiraling failure of government organizations in Abu Dhabi, there is
an equally developing need for effective and quality internal auditing. The need to
conduct study on this issue keeps growing as mismanagement of public resources
seems to thrive untamed.

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It has become increasingly critical to have a proper internal audit so as to
enhance desirable cooperate structures. A board cannot be able to function in any
proper way if there is a deficit in internal audit. According to Gramling, Maletta,
Schneider, and Church (2004), internal audit is among the cornerstones of public
governance and therefore helps in enhancing governance in federal governments. This
is the reason that makes internal audit an integral part of governance in the public
sector.
The government of Abu Dhabi employs more people than any other entity in the
country (Muqattash 2013). Consequently, government organizations have budgetary
allocations that enable them to cater for their expenses in pursuit of offering services to
the public. For these allocated funds to be used appropriately, it is necessary for the
federal government to diligently manage public finances with integrity. An extremely
important element of the governance of the public sector is the internal audit. This is an
element that is useful in supporting the government in its role of oversight provision
(Janse van Rensburg & Coetzee 2015). Without an internal audit, it is scarcely possible
to have proper governance of public resources. When this is achieved, the
organizations will unwittingly achieve their stated objectives. With the help of internal
audit, the management of federal government institutions in Abu Dhabi can easily detect
as well as assess the risks associated with various abuses contributing to the
organization’s control system improvement (Finance 2016).
Congruent with Goodson, Mory and Lapointe’s (2012) argument, good
governance is hinged on internal audit. Additionally, Badar (2012) argues that internal
audit has a great function of examining accounting records for verification of their

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accuracy. They also seek to establish the compliance of such records with appropriate
legal requirements (Vokshi, 2015).
Enofe, Mgbame, Osa-Erhabor, and AJ Ehiorobo (2013) hold that internal audit is
a key element among the most useful resources that are available to the public sector
managers. They argue that internal audit enables managers to fulfil accountabilities on
behalf of the citizens. Additionally, Unegbu and Kida (2011), the public sector has
witnessed a high degree of complexity and increased size in the recent past. This has
seen the need for internal audit rise to levels that were not thought of in the past. The
development of internal audit has been quite instrumental in improving the public sector.
Additionally, Amanuddin (2015) feels that, for internal auditors to deliver effectively
manner, they need to have the necessary qualifications like independence,
competence, and management support. Again, by default, internal auditors scarcely
relate well with the auditee in the public sector (Amanuddin 2014). This is a recipe to
failure since internal audit needs the proper support from the auditee so as to enhance
efficiency in the internal audit (Abdullatif and Kawuq 2015).
Management and internal audits are mediated by the audit committee in the
developed countries (Kamal Hassan 2009). As a consequence, the role of management
support in the developed countries is less important as compared with its role in the
developing countries (Alzeban and Gwilliam 2014). Cohen and Sayag (2010)
emphasize the importance of management support and argue that it is a critical factor in
effective and quality internal auditing. To them, it is not possible to rule out the effect of
other determinants like the technological competence of the staff (Nasibah and Ahmad
2009). Indeed, the lack of competent staff has been identified as listed as one of the
major problems that internal auditors must wrestle in federal government organizations

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in Abu Dhabi. Without competent technological staff, it is not easy to conduct internal
audits that are effective (Dittenhofer, 2001). Many authors are now interested in
establishing the variables that affect the effectiveness of internal auditing in government
organizations (Aliu, Breznica, Shala, Afiri 2016). On the other hand, Baharud-din,
Shokiyah, and Ibrahim (2014) found a reasonable relationship existing between the
effectiveness of internal auditing and independence, audit competence and
management support. This study had 330 respondents who were sourced from the
internal auditing departments in ministries that are in the public sector.
In 2013, Enofe et al., (2013) studied the role that internal auditing had on the
effectiveness that is in the public sector. From the study, they found that the local
government can easily achieve effective management. They established a link between
efficient management of the public sector and internal audit. Additionally, Salehi (2016)
researched on establishing the effectiveness associated with internal audit. From the
study, it was established that departmental size, competence, support of the
management and the autonomy of the internal auditors influence the effectiveness of
the internal audit. This study will seek establishing the variables underlying the internal
auditing quality for effective financial governance in federal government organizations in
Abu Dhabi, UAE.
Research Design
This research will adopt the co-relational research approach. The choice of this
design is based on its ease of establishing relationships between variables (Curtis,
Comiskey, and Dempsey 2016).

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Methodology
The quality of internal audits in federal government organizations in Abu Dhabi wants.
Although the internal audit is conducted regularly in government organizations, the
quality of the audits is questionable. There is a need in establishing the factors that
affect the quality of the internal audit for effective financial governance in federal
government organizations in Abu Dhabi, UAE. This study will focus on the working
environment, the autonomy of internal auditors the technical competence of internal
auditors. In this method, groups with existing qualities will be compared with the
dependent variable. The research will use secondary data. Data from the Finance
Department in Abu Dhabi will be grouped based on particular characteristics or traits. In
this study, the ex post facto research design will help the researcher in laying out the
research questions, implementation procedures, methodologies, data collection and
analysis for conducting the study.
Data will be analyzed by the use of descriptive as well as inferential statistics.
Descriptive data will be presented in percentages, frequencies and standard deviations
while inferential statistics will include correlation and the Pearsons Chi-square to help
understand the relationship between the variables. The chi-square model that will be
used as indicated below.
chi-square model.
X2= ∑(O-E)2
E
X2 = test statistic
∑ = Sum

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O= frequencies observed
E= frequencies expected
The p-value for the chi-square will be considered statistically significant within the range
of <0.001 (statistically highly significant) and <0.05 (statistically significant).
Ethical Issues
The data that is gathered will only be used for the purpose that is stated. There will be
utmost confidentiality and anyone participating in the study in any capacity will not be
revealed. Data coding will also be employed. Additionally, the research will be approved
by the student’s University. The names, telephone and address of the researcher will be
provided.
Assumed Outcomes
After the competition of the study, it is assumed that the quality of internal audit will
improve. This is because the factors that affect it will be analyzed and recommendations
put forward on how to address them. It is expected that there will be a better
relationship between the auditor and auditee in the federal government organizations in
Abu Dhabi, UAE.
Implications of the Study
This is a pivotal study that will form the basis of policy development in the future. Policy
developers may find this document useful in drafting appropriate policy interventions for
effective internal audits in Abu Dhabi, UAE.

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